ifo Business Climate Index Recovers (May 2020)
Sentiment among German companies has recovered somewhat after a catastrophic few months. The ifo Business Climate Index rose from 74.2 points (seasonally adjusted) in April to 79.5 points in May. Even though companies once again assessed their current situation as slightly worse, their expectations for the coming months improved considerably. Nevertheless, many companies are still pessimistic about their business. The gradual easing of the lockdown offers a glimmer of hope.
In manufacturing, the Business Climate Index rose appreciably. However, this was due only to companies’ much improved expectations. Industrial companies are still a long way from optimism. Their assessment of the current situation was once again markedly worse.
In the service sector, the business climate recovered notably from its historic low in April. This is primarily the result of a strong rise in expectations. Service providers also assessed their current situation as slightly better. However, companies are on balance still pessimistic.
In trade, too, the Business Climate Index rose substantially. There was a tangible recovery both in companies’ assessments of the current situation and in their expectations. The easing of the lockdown is improving sentiment among retailers in particular.
In construction, the index rose for the first time after seven consecutive months of falls. This was due to an unprecedented improvement in expectations. However, construction companies assessed their current situation as somewhat worse.
Prof. Dr. Dr. h.c. Clemens Fuest
President of the ifo Institute
